FIA fines and disqualifies USF1

The FIA World Motor Sport Council has announced that they have fined the USF1 team €309,000, and disqualified them from competing in any FIA championship, for failing to make the grid this year. The team had pulled out 3 weeks before the season opener, saying that they would not be ready in time.

The American project was set to become one of the 4 teams to compete in the 2010 Formula 1 season, but they failed to make the grid, because of a lack of sponsors, and their car was not ready. They requested the FIA to postpone their entry until the 2011 season, but the FIA rejected this proposal, seeing as the other teams were on course to make the grid. After USF1 pulled out, the FIA soon announced that they would be taking action against the team, as they had broken the terms of their entry.

USF1 representatives attended a hearing in Paris yesterday. In their defence, they argued that the period of uncertainty, caused by the Concorde Agreement and proposed budget cap rules during the 2009 season, had hampered their efforts. They also suggested that Bernie Ecclestone was deterring sponsors from the team, after making negative comments about them.

The FIA rejected all of these suggestions, saying that:

"The WMSC considered US F1 had cooperated fully with the FIA in its
investigation, and had been entirely open in answering the questions
of the Reporter.
The WMSC however did not consider events of 'force majeure' were
established in this case as there were no compelling supervening
events but instead this was about a lack of funds.
Nor did they accept statements from FOM [Formula One Management]
had had any real material impact.
Rather they considered that the team, whilst well-intentioned, had
displayed poor financial management and had underestimated the
requirement to present an F1 car for the 2010 season in the time
and with the financial resources available to them.
It was wholly unacceptable that the FIA was presented with only
three weeks warning of the total non-appearance of the team at the
Grand Prix in Bahrain and for the 2010 season, and WMSC members had
real concerns about the impact on the championship, not least the
deprivation of the opportunity for another team to have provided
two cars to run in the championship in 2010 instead of US F1.
The FIA has fined US F1 309,000 euros, the equivalent of the
championship entry fee and ordered it to pay the costs of the FIA
disciplinary process, and disqualified the team, "which definitively
deprives US F1 of the right to take part, in any way whatsoever, in
any competition."

Also, after having read the full WMSC report (link at bottom), it seems that USF1 were not very clear on their budget either. In December 2009, when doubts were growing over them competing in 2010, USF1 claimed that they had $26m of sponsorship money, under 3 different binding contracts, meaning that they didn’t have it yet, but the binding contract would force them to get it. However, the FIA found out that only one of these contracts were binding ($8m), meaning that the other $18m was not actually binded to USF1.

Because of this lack of sponsorship money, USF1 did not have enough capital to build their cars and spares, as the report explains:

"USF1 was unable to produce its race cars and necessary spares in
the time available. This was a result of lack of adequate and
timely capital investment combined with sponsorship arrangements
which did not com to fruition or were terminated. This caused a
delay in construction of the cars and equipment."

The Entry Fee for competing in Formula 1 is €309,000. This is a deposit for the FIA, and is later added to the deposit paid to Cosworth for their engines. USF1 had paid the Entry Fee, given the deposit to Cosworth, and also made the first payment under their contract (even though USF1 had previously stated that they did not want to use the Cosworth engines).

The FIA found out that after all of this, USF1 had “little or no financial liquidity”. The FIA were then advised that a new fine to the team would be pointless, as their lack of liquidity would mean that they would probably be unable to pay. Therefore, they were advised that “at the very least” they should force USF1 to forfeit their Entry Fee.

At the end of their report, the FIA fined USF1 €309,000 (in other words, make them forfeit their Entry Fee), disqualifying them from any taking part in any competition whatsoever (no timeframe specified), and force them to pay the FIA’s costs for this inquiry. USF1 have 7 days to appeal.

In my opinion, this is very good news. It is absolutely unacceptable that a team could pull out with only 3 weeks to go, leaving another prospective team without a space on the grid. Their situation spiralled out of control in late 2009, yet they continued to claim they would make the grid, up to February 2010. The team and investors have lost approx. €20m in total from this failed attempt to enter F1, because of poor financial management, and a lack of knowledge of the sheer effort required to enter Formula 1.

While this never should have happened in the first place, this is a good response from the FIA, considering the sheer farce of USF1’s attempt to enter F1.